Standard Variable

The advantage of a variable rate loan is that you ususally have more flexibility with the loan; for instance, you can often make extra repayments without penalty. The disadvantage is that your loan interest rate can vary up and down which will affect your repayments and is more difficult to budget for.

Basic Variable

As its name suggests, this type of loan is a variable rate loan without the usual bells and whistles. Generally, this rate is a cheaper rate than the standard variable loan, however it may be more limited for flexibility or you may have to pay extra for basic features. On the flip side, you’re not paying a premium for loan options you may not use.


Your interest rate is fixed for a period of time that you nominate (generally 1-5 years) so your repayments will remain the same irrespective of economic cycles. While it is easy to budget your repayments, you may also have restrictions regarding changing the loan, including making extra repayments or lump sum repayments. It is also worth reviewing your loan when your fixed term expires as usually the interest rate will revert to a standard variable rate which is often higher than other available variable rates.

Line of Credit

In this case, you have a credit limit, much the same as with a credit card. You can keep a nil balance and then use the funds as needed. You’re required to repay the interest only that you’ve accrued over a month and if you want to make large lump sum payments, this is easily done. The challenge is that this very flexible loan type may be slightly more expensive than other variable loans available.

Discount/Honeymoon rates

These loans are designed to allow an initial low rate which reverts to the standard variable after a short period (usually 1-3 years). The benefit of this loan is that you are able to pay extra off the loan during the discounted/honeymoon period, and allows lower repayments for the first year or so.

Non conforming

These are loans for people who have had issues with credit previously  a poor credit history or don’t fit the normal lending criteria of the major banks. The interest rate is usually higher or the loan restriction are greater, however, it may be a short term lending solution that suits your needs if other lenders won’t meet your funding requirements.